By William L. Watts and Sarah Turner, MarketWatch FRANKFURT (MarketWatch) — The U.S. dollar edged lower in quiet trade Wednesday as market participants awaited the conclusion of the U.S. Federal Reserve’s two-day policy meeting later in the day, although remarks by the head of Germany’s Bundesbank damped expectations for bold policy measures by the European Central Bank on Thursday. The dollar index DXY +0.02% , which measures the greenback against a basket of six other currencies, traded at 82.562, against 82.619 in late North American trading Tuesday. The WSJ dollar index XX:BUXX +0.08% , a recently launched gauge of the dollar’s performance against other heavily traded major currencies, traded at 71.68, unchanged from Tuesday. “A broad rally in risk, based on little other than hope that upcoming policy announcements will offer support, has carried the Australian dollar to a four-month high,� said Adam Cole, currency strategist at RBC Capital Markets in London. The Australian dollar AUDUSD +0.1698% traded at $1.0524 in recent action after trading as high as $1.0542, up from $1.0514 late Tuesday. Read more on Australian dollar. “Typically hawkish comments from Bundesbank President [Jens] Weidmann were sufficient to halt the rally and leave the euro lagging, but in net terms, today is still risk-on,� Cole said. Weidmann’s warning Weidmann, in an interview conducted in June for an internal Bundesbank magazine but published on the central bank’s website Wednesday, warned that the ECB must not overstep its price-stability mandate. Read about Weidmann’s comments. The euro EURUSD -0.0697% traded at $1.2310, little changed from late Tuesday, while the British pound GBPUSD -0.3700% fell to $1.5631 from $1.5682. The Fed was due to conclude its meeting later Wednesday and economists expected the U.S. central bank to pledge to keep interest rates low for longer. Read Fed preview. However, “if the Fed opens the door even wider to a third round of quantitative easing, the U.S. dollar will find little solace from a lack of QE today, as the Fed will merely be seen to delay such a move until September,� said Crédit Agricole strategists. “Combined with the impact of firmer risk appetite over recent days, and consequently reduced safe-haven demand, the U.S. dollar will struggle to make any headway in the near term,� they said. The Japanese yen USDJPY +0.1054% was little changed as the dollar traded at ¥78.16, compared with ¥78.18 in late trading on Tuesday. William L. Watts is MarketWatch's European bureau chief, based in Frankfurt. Sarah Turner is MarketWatch's bureau chief in Sydney.

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